Image courtesy of Flickr_Sheila Sund

Beat the scammers

Investment and pension scams are becoming ever more sophisticated, from fancy fake websites to the ‘cloning’ of authorised businesses. Rule number one is always to reject unexpected offers.

Rule two is that, if it looks too good to be true, it probably is. If in doubt, check the FCA ScamSmart site (www.fca.org.uk/scamsmart) and ask our advice.

Image Courtesy of Flickr_Ishan Manjrekar

Rupees, Pounds or Dollars? The Asian Art Market in Review

Guest blog from one of our preferred valuation partners, Doerr Dallas Valuations.

Author: Laura Williams, Indian Art Specialist.

Nobody anticipated the extreme highs of the past few weeks. Particularly in what may potentially be the worst recession of our lifetime. In Mumbai, the room was devoid of clients but that did not alter the fact that the most expensive artwork by an Indian artist had just been sold. There must have been a smile underneath the masks of Dadiba & Khorshed Pundole. The owners of Pundole’s Auction House had just sold a painting by V S Gaitonde on the hammer, for just over £3.6 million pounds. Years of hard work paid off. The record had been set.

With hardly time for the world-record Gaitonde to be taken off its nail, down the road and hot on its heels, Mumbai’s other leading auction house Saffronart was putting up its remarkably similar work, again by V S Gaitonde. Celebrating twenty years of Auctioneering, the Vaziranis pulled out all the stops and without a single-owner collection had pulled together a strong selection of works by leading practitioners. The hammer at Saffronart, like an echo across the City, came down on the Gaitonde, just short of the recent record. Those used to the big-buck rooms of the International art world may give a conciliatory nod to these figures. But consider that in 2013 the same Gaitonde artwork could have been picked up for around £500k and in 1980 it may have cost a modest £500. Oh, how collectors of South-Asian art, like all aficionados, must wish for a time-machine.

For a few years the name Gaitonde has been like dangling a golden carrot in front of the noses of collectors. Equally exhilarating, at the same sale at Pundole’s was the sale price of close to £1million pounds for a work by J S Swaminathan. And it has been the same story for the past few, lockdown, months. The Insta feeds of the auction houses flash at almost the same speed as the rise of the announced prizes, declaring, ‘The highest price achieved for the artist’. The party we are invited to appears to be getting bigger and the list of names added to its celebrity artist list is expanding.

When India embraces an idea, it does so with full gusto. Particularly when it comes to investment potential. ‘I know a great street-food chef’ can transform in the blink-of-aneye into, ‘Business Woman Launches her 200th Food Truck!’ Likewise, a Zarina print can quickly morph from a £10,000 estimate into a £50,000 artwork – as seen at the recent sales. According to Rob Dean, Director of Pundole’s, ”The market may currently be inflated due to worldwide lockdowns but do I think the South-Asian art market is set to be one of the biggest markets in years to come? Yes, I do”.

You could have heard the proverbial pin drop at this week’s Sotheby’s sale of Modern and Contemporary South-Asian Art in London. Lot 40 by Indian artist Bhupen Khakhar made a dazzling £2 million pounds (inc premium) against a suggested price of £250,000 – £450,000. The wide-ranging estimate, a great pointer to the fact that even the experts are not quite sure where the star pupils sit. But the sound of the hammer sadly sounded hollow, just a few lots later, when the stunning oil on canvas, a 1969 work by the much loved V S Gaitonde, failed to sell. The story was the same earlier in the month, when a similar canvas by the same artist also failed to get off the starting block at Christies in New York. The significance of right place, right time and knowing the difference, for each artwork, is evidently crucial.

What does this tell us? The primarily domestic, South-Asian, art market is clearly happier spending its rupees than its pounds or dollars. Perhaps most encouraging, is that a discerning eye appears to be coming into play. Take a tale of two paintings by the respected artist N S Bendre. Two poor examples appeared in Sotheby’s sale, one scrapping past its low estimate of £15,000, the other fai led to sell. Whilst two canvases, of a similar size and year, strong works, sailed past their estimates to achieve around £110,000 and £148,000 each, including premium, at the Saffronart

Auction two weeks earlier in Mumbai. Let’s hope this throws the ridiculous priceper-inch calculator that dealers of South-Asian Art are so fond of, well and truly out of the window and that buyers are understanding that not every Husain is a good Husain.

So, cheers for some and commiserations for others in what appears to be a market that is at last finding its feet. But in this growing arena whilst knowledge of the current sales will be of importance to the UK Insurance industry, this rising market will also mean that many owners of artworks from South-Asia are probably significantly underinsured. Art as a commodity can be tricky. We understand the process of valuation. But it is never as simple as it seems. Finding a valuer for many can be an unknown entity or simple not top of the to do list.

It is a new part of the same old story; we buy art because we love it, for investment and often secretly for both. Artworks get passed down through families, normally with a tale to tell about how Grandpa picked up the sculpture when he was in the East.

Sometimes these are cherished pieces, often tastes differ through the generations. The painting gets put on top of the wardrobe. We have all seen the faces of the owners of such artworks on the TV, being told by the expert that it is probably worth a couple of hundreds of pounds. But not so in the South-Asian, particularly the Indian, art context.

Here the roles are reversed. Pieces thought to be worth a few pounds are often valued in the thousands and beyond.

For those expats and non-resident Indians who bought artwork on their travels, it may be worth looking up from this article and scrutinising the artwork hanging above the desk, in the same place it has been for the past thirty years. Unlike our other assets we let value hide in our homes as it is the easiest option. It is rare that those left a house in a will would take a tour, exclaim its beauty, then lock the door and walk away. Like houses, art has value. In some cases, it can even exceed the value of the wall it sits on.

To arrange a confidential review of your personal insurance including art collections, high value home building and contents, wine collections, high value performance and classic cars, please contact our Private Clients Manager, Kim Shergold, on 020 8681 4994

 

PK Partnership cost of financial advice

Video witnessing for wills

The Government is changing rules to allow remote witnessing of wills via video calls in England and Wales. It is already legal in Scotland, but not yet in Northern Ireland.

New legislation in September 2020 will backdate the measure to 31 January 2020, but two witnesses will still be required. The change will last through to 31 January 2022 or as long as necessary through the pandemic.

The FCA does not regulate will-writing.

Image courtesy of Flickr_Pink Sherbert Photography

Sharp fall for dividends

UK dividends were down more than 50% in the second quarter of 2020.

The pandemic has hit the global economy hard and devasted the dividend payments of many leading UK companies. Between April and June 2020, total UK dividend payments were 57.2% lower than in the second quarter of 2019, according to Link Asset Services.

Many companies – notably the big banks – stopped dividend payments altogether.

Despite the cuts, Link’s worst-case-scenario is that UK shares will provide an income yield of 3.3% over the next year – still much better than current deposit rates.

The value of your investments and the income from them can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

PK Partnership Budget Savings and Pensions

Things are slowly returning to normal…

As Government lockdown measures continue to ease for most sectors, we have started our phased return to the office, operating a skeleton staff throughout the week.

Our switchboard number 020 8681 4994 is fully operational and individual members of the team can still be reached directly:

Wealth Management & Mortgages

Jonathan Kelly – 020 8256 9984

Gina Gasparino – 020 8256 9990

Carmel Jones – 020 8256 9982

Estate Planning

Prakash Patel – 020 8256 9983

Aine O’Flaherty – 020 8256 9985

Insurance

Amit Patel – 020 8256 9986

Kim Shergold – 020 8256 9981

Mahend Roopchund – 020 8256 9980

Danny Levett – 020 8256 9989

If you have any questions relating to your financial or insurance arrangements please do not hesitate to contact the team on 020 8681 4994.

In the meantime, we hope you are enjoying a safe and happy summer.

Image Courtesy of Flickr_Ishan Manjrekar

Summer Statement 2020

An unprecedented Summer Statement was delivered today by the Chancellor of the Exchequer, Rishi Sunak.

Although the economy is starting to open up gradually after its pandemic-enforced quarantining, the chancellor’s statement is an attempt to stem the damage from a forecast 14% slump in GDP this year, according to the Bank of England, and a potential rise in the unemployment rate from 3.9% to 15%, according to the Organisation for Economic Cooperation and Development.

About the Budget

This snapshot is not an in-depth analysis but aims to give you a quick summary of the key points announced by the Chancellor from the dispatch box.

More details are available from GOV.UK

Main Headlines from the Speech

Introduction

  • Extraordinary measures introduced to offset effects of Covid-19 virus
  • £160bn spent by Government in addressing the Corona virus crisis
  • Economy contracted by 25% in first six months of year
  • Government will not be defined by the crisis, but by their response to it

 

Economic Measures

  • Three point strategy to support, protect and retain jobs
  • Furlough scheme to be wound down gradually from October
  • £1,000 bonus payable to employers for retaining furloughed employees
  • ‘Kickstarter’ job package for 16-24 year olds
  • Government subsidy worth up to £6.5k for each employee taken on under Kickstart Scheme
  • £2,000 bonus for employees taking on trainees
  • £1,500 bonus for apprentices over age 25
  • Companies able to apply for job subsidies within one month
  • Additional funding for the National Careers Service
  • Help for long term unemployed
  • £1.6bn additional funding for DWP

 

Infrastructure/Housing

  • £3bn scheme to make homes and buildings more environmentally friendly
  • £2bn Green Homes Grant to make homes energy efficient – up to £5k per household
  • £1bn to improve energy efficiency of public buildings
  • Property transactions fell by 50% in May
  • Stamp duty threshold raised to £500K (from £125K) until 31/3/21 effective immediately.
  • Predicted 9 out of 10 people will pay no SDLT this year.

 

Hospitality and Tourism

  • 1.8 million people employed in the hospitality and tourism sector. 1.4million workers in the sector have been furloughed. 80% of sector stopped trading in April
  • VAT on food, accommodation and attractions to be cut to 5% from 15 July until Jan 12th 2021
  • August special – ‘Eat out to help out’ – 50% discount available Mon to Weds worth up to £10/head (at participating establishments).

 

Image courtesy of smee.bruce, Flickr

Financial Focus: Summer 2020

No one could have predicted how the last few months have turned out. The disruption to everyday life seems set to continue, with coronavirus lockdown measures easing but still bringing us nowhere near to our to ‘pre-Covid-19′ lives. The same can be said for the stock markets, which have seen sharp falls; the investment landscape has certainly shifted – if not permanently, then for the forseeable future. This naturally has implications on personal financial planning, savings and investments, protection and pensions. Will-writing and estate planning has also seen a recent increase in demand, for sobering reasons, but the astonishing fund-raising accomplishments of Captain Tom Moore highlight the importance of planning for long and productive later lives. In this edition we bring you an overview on how these globally altered circumstances may impact on your own financial positions. Click here to read our summer newsletter. FOCUS Summer 2020 INSTAGRAM

PK Partnership cost of financial advice

COVID-19: Unoccupied Commercial Property Conditions

Due to Government advice and restrictions resulting from the COVID-19 lockdown, the continued closure of many businesses throughout the UK and indeed around the world has seen a large number of unoccupied businesses and commercial buildings. Unoccupied buildings, closed temporarily or permanently, can be at greater risk from theft, escape of water, arson or vandalism.

If your business premises remain closed, it is important that you adhere to the unoccupancy conditions of your policy. You should refer to your policy wording for the exact requirements defined by your insurer. As the majority of policies advise, if you do not comply with these conditions you will not be covered. 

In general, insurers will be looking for the building to be appropriately inspected and secured as follows:

  • the premises must be inspected internally and externally at least once per week
  • secure the premises ensuring doors, windows and gates are locked
  • ensure intruder alarms are activated
  • gas and electricity must be turned off at the mains (other than any electricity supply supporting any intruder or fire alarm)
  • turn off the water supply at the mains
  • all refuse and waste materials must be removed from the premises
  • ensure all fire alarms and sprinkler systems remain fully operational
  • ensure that internal fire doors are closed
  • ensure all non-essential electrical devices are turned off

It is advisable to keep a written record of this activity.

If your insurance policy has unoccupied/security conditions and the property was unoccupied prior to the COVID-19 outbreak, then the usual conditions required by your insurer remain the same as before.

This is an extremely difficult time for businesses and PK Partnership want to provide you with as much help as possible during this time of temporary change to working practices to ensure you comply with the conditions of your policy.

If you have any questions relating to your insurance arranged through PK Partnership or if there has been any change to your business activity that may affect cover please contact your account executive on 020 8681 4994.

PK Partnership cost of financial advice

Covid-19 measures: to May 2020 update

Following the range of updates over the last several weeks, we have now rounded up the latest information from the government on specific schemes where additional detail was released. This update covers measures through to 22 May.

Coronavirus Job Retention Scheme (CJRS)

On 12 May the Chancellor announced the extension of the CJRS by four months to the end of October:

  • Furloughed workers will continue to receive 80% of their current salary, up to current maximum of £2,500.
  • From the start of August, furloughed workers will be able to return to work part-time, with employers being asked to pay a percentage towards the salaries of their furloughed staff.
  • Also from the start of August, employers will have to start meeting part of the cost of the scheme overall.
  • More details and information around the implementation of the August changes will be made available by the end of May.

 

The next announcement at the end of the month will be a crucial one, as it will force many employers to decide whether to continue furlough after the end of July – and start to meet some of the furlough costs themselves – or to start the 45-day consultation period required for proposed collective redundancies of 100 or more employees.

The current expectation is that the government payment will fall to 60%. It will not be an easy decision, as underlined by the March to April jump of 69% in unemployment-related benefit claims to 2.1 million.

The latest figures show CJRS has resulted in:

  • 8 million employees having been furloughed; and
  • Total payments made amounting to £11.1bn.

The Office for Budget Responsibility’s latest projections put the gross cost of the scheme at £14bn a month, although once income tax and NICs are considered the net cost is £10bn – £11bn.

Self-employed Income Support Scheme (SEISS)

The scheme is now live and 2 million claims had been submitted by 18 May with a total value of £6.1bn (an average of about £3,000 each). The Chancellor continues to be lobbied about small company directors who draw dividends as their remuneration rather than salary, but nothing has emerged except that the Treasury is still thinking about it.

Bounce Back Loan Scheme (BBLS)

The scheme opened for business at 9.00 am on 4 May. As at close of business on18 May:

  • The number of approved loans had risen to 464,393; and
  • The total advanced had reached £14.18bn, an average loan of about £30,500.

The number of accredited lenders has remained unchanged at 14.

Coronavirus Business Interruption Loan Scheme (CBILS)

The number of accredited lenders has grown  to 76.

As at close of business on 18 May:

  • The number of approved loans had risen to 40,564; and
  • The total advanced had reached £7.25bn an, average loan of about £178,700.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

On 19 May the Chancellor announced that the upper limit for loans under this scheme would be raised from £50m to £200m from 26 May. Any company receiving a CLBILS will be asked to agree to not pay dividends and to “exercise restraint on senior pay”, which the Treasury says includes a ban on cash bonuses, except where they were previously agreed.

As at close of business on 18 May (i.e. before the increase announcement):

  • The number of approved loans was 85; and
  • The total advanced had reached £0.59bn, an average loan of about £6.86m.

The scheme currently has 12 approved lenders.

Business rates revaluation

The Ministry of Housing, Communities & Local Government (MHCLG) has announced that the business rates revaluation for England and Wales, which was due to take effect from April 2021, has been postponed. This would have used a valuation date for open market rentals of 1 April 2019 (as opposed to the current 1 April 2015).

It is unclear how long the postponement will last. The MHCLG had been aiming to reduce the revaluation cycle to three-yearly and there was legislation to this effect going through parliament. Given the great difficulty surrounding commercial property valuations at present – especially for the most controversial sector, retail – it is possible that postponement will be for at least a couple of years.

Deferred Self Assessment Payment on Account

On 15 May HMRC issued guidance on how to defer the second payment on account for 2019/20, due on 31 July 2020. This confirmed that the option is available for individuals:

  • registered in the UK for self assessment; and
  • finding it difficult to make their second payment on account by 31 July 2020 due to the impact of Covid-19.

HMRC restated that it will not charge interest or penalties on any amount of the deferred payment on account, provided it is paid on or before 31 January 2021. There is no requirement to notify HMRC of the intention to defer.

Mortgage holidays

In March the government introduced legislation which prevented residential mortgage lenders starting repossession proceedings if repayments were not made. This protection was scheduled to end on 30 June.

According to the Treasury over 1.8m mortgage payment holidays were taken up as a result. On 22 May the FCA published proposals which would extend the holiday period to 31 October, coinciding with the current end date for the CJRS. Lenders have until 26 May to respond to the FCA’s proposed measures, with guidance expected to be finalised ‘shortly afterwards’.

Reimbursement of work-at-home expenses

The government announced on 13 May that there will be a temporary tax and NIC exemption where a payment is made by an employer to reimburse an employee for the cost of equipment purchased to enable home working.

A statutory instrument brings the exemption into being from 11 June. However, in a parliamentary statement the Treasury said that “HMRC will exercise its collection and management discretion and will not collect tax and NICs due on any reimbursed payments made from 16 March 2020”.

Insurance

On 14 May the Financial Conduct Authority (FCA) issued a statement setting out measures for insurance companies  which took effect from 18 May. These included requiring insurers to consider:

  • Reassessing the risk profile of customers. The FCA notes this may have changed because of Covid-19 creating scope to offer customers “materially lower premiums”.
  • Whether there are other products they can offer which would better meet the customer’s needs and revise the cover accordingly, e.g. a move from fully comprehensive cover to third party fire and theft.
  • Waiving cancellation and other fees associated with adjusting customers’ policies.
  • Granting customers a payment deferral unless it is obviously not in their interests to do so. That payment deferral should be for a period of between one to three months and be available to any customers up to 18 August 2020.

Business Interruption Insurance

On 15 May the FCA issued a statement setting out how it was “engaging with policyholders and insurance intermediaries” on the contentious issue of business interruption insurance. The regulator invited both groups to provide information ahead of its planned court action, aimed at obtaining some clarification on policy wordings.

Future Fund

The Future Fund was opened for business on 20 May. It is designed to provide £250m in matching finance for innovative and high growth businesses which cannot access other schemes. The government has said it would amend the rules of the Enterprise Investment Scheme to protect Future Fund investors from losing relief on their previous investments made prior to any investment through the Future Fund. The Fund will operate in partnership with the British Business Bank.

Office for Budget Responsibility (OBR)

The OBR issued updated coronavirus cost projections on 14 May. These do not take account of the CJRS extension, but nevertheless put the cost of government measures in 2020/21 at £123.2bn. The OBR has made no amendments to its main coronavirus reference scenario, issued on 14 April, which assumed a V-shaped recovery.  Since then there has been a growing consensus that the recovery will not be as rapid a bounce back as some had hoped. Leaked papers from the Treasury show that it is much less optimistic than the OBR.

Covid-19 recovery strategy

Following the Prime Minister’s presentation on Sunday 10 May, a raft of material was issued on 11 May setting out the government’s plans and further guidance. This included a 60-page recovery strategy document and eight guides for employers, employees and the self-employed on safe working practices.

 

 

Image Courtesy of Patrícia Almeida on Flickr

Covid-19 measures: 4 May 2020 update

Following the range of updates over the last several weeks, we have now rounded up the latest information from the government on specific schemes where additional detail was released. This update covers measures discussed on 4 May.

Bounce Back Loan Scheme (BBLS)

The scheme opened for business at 9.00 am on 4 May. Since last week’s initial announcement further details have emerged:

Terms

  • The loan can be between £2,000 and £50,000, subject to a maximum of 25% of turnover.
  • The government provides a 100% guarantee to the lender: the always borrower remains fully liable for the debt.
  • No security is required.
  • The first year’s interest will be covered by a government Business Interruption Payment. During that period, the borrower does not have to make any repayments.
  • The interest rate thereafter is set at 2.5%.
  • There are no fees for the borrower.
  • The maximum term of the loan is six years, but repayment is allowed at any time. No early repayment fees will apply.

 

Criteria

  • The application form contains only seven questions which require basic information, e.g. turnover, company number etc.
  • While the British Business Bank will run the scheme, it recommends businesses should directly approach lenders. At present only ten banks are participating (nine of which are High Street names). Only one, HSBC, is offering loans to non customers, subject to know-your-customer and other checks.
  • The borrower must be based in the UK, have been negatively affected by coronavirus and be able to confirm that on 31 December 2019 it was not a “business in difficulty”.
  • If the business cannot pass that end-2019 financial test, then it must certify that the loan does not breach de minimis State aid restrictions and will not be used to support export-related activities.
  • Applicants cannot have received a loan under the existing Coronavirus Business Interruption Loan Scheme (CBILS). However, a CBILS loan of up to £50,000 can be transferred to the BBLS up until 4 November 2020.

The first day of the BBLS saw over 110,000 businesses apply for loans totalling an estimated £3.3bn (an average loan of about £30,000).

Coronavirus Business Interruption Loan Scheme (CBILS)

With the advent of the BBLS, the minimum new loan under the CBILS has been increased to £50,000.

The number of British Business Bank accredited lenders under the schemes now over 50.

As at 29 April, £4.1bn had been lent to 25,262 borrowers (an average loan of about £165,000)

Coronavirus Job Retention Scheme (CJRS)

The Department for Work and Pensions has confirmed that pay for furloughed workers taking family-related leave (e.g. Maternity Pay and Paternity Pay) is to be based on normal earnings rather than furloughed pay.

The Pensions Regulator has issued updated guidance for employers on automatic enrolment of pension and the CJRS.

As at 3 May CJRS applications from 800,000 employers had been received and 6.3 million employees – about 20% of UK employees – were covered by the scheme, according to HMRC. The total value claimed is £8bn.

Given the 45-day consultation period for redundancy, any announcements on the extension of the CJRS beyond 30 June are likely within the next week.

Self-employed Income Support Scheme (SEISS)

Revised guidance now has more information on eligibility and is supported by a new online eligibility tool.

The launch date of the scheme has been confirmed as Wednesday 13 May. Approved claims will be paid “within 6 working days”.

Despite considerable lobbying there have been no moves from the Treasury to assist directors of small companies who rely on dividends to provide their remuneration.

Grant Funding Schemes

On 2 May, the government announced a £617m extension to the Small Business Grants Fund (SBGF) and Retail, Hospitality and Leisure Grants Fund (RHLGF) schemes. This is primarily aimed at businesses operating in shared spaces (e.g. co-working offices), regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates. The allocation of funding will be at the discretion of local authorities.

Businesses must have under 50 employees and be able to demonstrate that they have seen a significant drop of income due to Coronavirus restriction measures.

There will be three levels of grant payments:

  • The maximum will be £25,000.
  • There will also be grants of £10,000.
  • Local authorities will have discretion to make payments of any amount under £10,000.

Further guidance for local authorities will be set out shortly.

Tax credits

The government has confirmed that those unable to work their normal hours or furloughed because of Covid-19 will continue to receive their usual tax credit payments, provided they remain employed or self-employed. Covid-19-related changes to income and/or hours do not need to be reported, but any other changes must to be notified to HMRC in the normal way.

Business Interruption Insurance

Following its ‘Dear CEO’ letter on 15 April, the Financial Conduct Authority (FCA) has announced that it “intends to obtain a court declaration to resolve contractual uncertainty in business interruption (BI) insurance cover”. The FCA says that “any uncertainty needs to be resolved as quickly as possible” and it hopes to place the issue before the courts “in an agreed and urgent manner”.

Any judgement will not determine how much is payable under individual policies but will provide the basis for doing so and offer guidance for the Financial Ombudsman.

Lifetime ISAs (LISAs)

The Treasury has temporarily reduced the withdrawal charge on LISAs from 25% to 20%, removing what had been an effective 6.25% penalty once the government bonus was taken into account. The reduction applies from 6 March 2020 to 5 April 2021, meaning some (dis) investors in March and April will be due a refund.

Summary of government business support

Firm Size Turnover < £45m Turnover > £45m Investment grade
Bounce Back Loans (BBLS – up to £50,000) X X X
Coronavirus Business Interruption Loan Scheme (CBILS – £50,000 – £5,000,000) X
Coronavirus Large Business Interruption Loan Scheme (CLBILS) X X
Covid Corporate Financing Facility (CCFF) X
Job Retention Scheme X X X
Business Grants (dependent on rateable value of the property) X X X
VAT deferrals X X X
Covering the cost of statutory sick pay X X X
Future Fund (only if VC funded) X X

Source: HM Treasury/GOV.uk, 4 May 2020 press release

 

CLIENT LOGIN


Personal Finance Portal standard life